The following interesting article comes from “Leaflessclover”
a respected LSE bulletin board member who keeps a keen eye on Gas supply and
demand within Tanzania…
At the end of May 2018, The Tanzanian Energy
Minister made a speech to parliament:
https://www.nishati.go.tz/wp-content/uploads/2018/05/Hotuba-ya-Bajeti-ya-Wizara-ya-Nishati-kwa-mwaka-2018-2019.pdf (You will
need to translate from Swahili).
Prior to this, the most up to
date information I had regarding the timings of new gas fired power plants in
Tanzania came from reports from Orca and WRL.
Compared to those previous sources of information the Minister’s speech contained
the following new/different information:
1.
Kinyerezi
I – dates appear unchanged (previous info - starts to be commissioned Q4 2018,
fully commissioned in 2019. Latest info
- Construction of the project began in November 2016 and is expected to be completed
in January, 2019.
2.
Symbion at
Mnazi Bay – not mentioned
3.
Kinyerezi
II – unchanged but more information about current production rates and exact
month that it will be fully operational (last month / June)
4.
Kinyerezi
III – dates have moved out. In previous
sources was “Operational Q2 2019”, now due to complete “December 2021”
5.
Kinyerezi
IV – not mentioned. Presumably because
construction starts outside of the current budget cycle. Previous info (from Orca report) was that it
would be operational in Q3 2019. This is
clearly now not the case.
6.
Mtwara –
new information previous sources did not have dates. The minister said “Project construction is
expected to begin in November 2018 and completed in June, 2021”
7.
Somanga
Fungu – new information previous sources did not have dates. The minister said “Construction of the
project is expected to start in September, 2018 and completed by September,
2021”.
In terms of implications for the
demand profile between now and the end of 2020, the key point is that Kinyerezi
III and IV have been pushed out to 2021 and beyond. So the demand profile is less promising. However, as Kinyerezi I and II are still on
track, it still looks like Tanzania will run out of spare gas production
capacity during Q1 next year unless we or one of our competitors tie in
additional wells or add compression.
Even if all competitors implement
all of the previously communicated possibilities (additional wells from Orca,
compression for Mnazi Bay, etc) and if the Symbion at Mnazi Bay plant still commences
in Q1 next year (likely to be there or thereabouts as this was a nearer term
target), Tanzania would still run out of production capacity in Q3 next year.
So, someone needs to produce more
gas by Q1 next year and, in total, by Q3 next year, Tanzania will need about
another 60MMscf/d more capacity than exists today.
It looks as though things will
then plateau in Q1 2020 (by which time a total of ~90MMscf/d of additional
capacity must be found) and will remain steady until June 2021 when the 300MW Mtwara
goes live, followed by 330MW Somanga Fungu in September 2021 and 600MW Kinyerezi
III in December 2021. By Q4 2022, a
total of about 210MMscf/d of additional gas production capacity.
Taking the data from previous
sources and the Minister’s speech, the forecast for demand growth Vs gas
production capacity now looks like this:
PRODUCTION CAPACITY
1.
Does not
include any data for Kinyerezi IV (450MW).
This will continue to propel demand upwards after 2022.
2. Doesn't take account of potential for gas to be
used to heat oil pipeline, or for potential export via the pipeline.
3. Doesn't take account of the plant that Siemens
want to build.
4.
Doesn't
take account of request from Malawi for urgent gas imports from TZ.
The way I see it, the government has to move very soon to grant the development licence that Aminex has applied for because if not, further delays are going to put their own time scheduled plans in jeopardy. Even for Aminex to supply in the time frame required, Chikumbi (CH1) has to be drilled and the 30km pipe has to built within the next nine months. Neil Ritson CEO of Solo a company with 25% interest in the Ruvuma drills hinted strongly in his annual report that drilling and monetisation is expected within 2018, so it looks like things should be moving forward for Aminex shareholders in the very near future! A big thanks Leafs for doing the research and putting this all together.